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Last update on 2024-06-27

Siemens Energy (ENR.DE) - Dividend Analysis (Final Score: 4/8)

Analyzing the dividend policy of Siemens Energy (ENR.DE) using an 8-criteria scoring system, focusing on stability and performance. Final Score: 4/8.

Knowledge hint:
The dividend analysis assesses the performance and stability of Siemens Energy (ENR.DE) dividend policy using a 8-criteria scoring system.
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Short Analysis - Dividend Score: 4

We're running Siemens Energy (ENR.DE) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Criteria
Dividend Yield Higher than the Industry Average?
0
Average annual Growth Rate higher than 5% in the last 20 years?
0
Average annual Payout Ratio lower than 65% in the last 20 years?
1
Dividends Well Covered by Earnings?
1
Dividends Well Covered by Cash Flow?
1
Stable Dividends Since the Company Began Paying Dividends?
1
Dividends Paid for Over 25 Years?
0
Reliable Stock Repurchases Over the Past 20 Years?
0

The dividend analysis yielded a score of 4 out of 8 for Siemens Energy (ENR.DE). The assessed criteria comprised aspects like dividend yield, growth rate, payout ratio, dividend coverage by earnings and cash flow, stability of dividend payments, duration of dividend payments, and stock repurchases. Siemens Energy's dividend yield for 2023 (0.8333%) is below industry average (3.02%). Additionally, no dividends were given from 2017 to 2021. Despite positive free cash flow in several years, the dividends if calculated weren't well covered by company earnings. Moreover, Siemens Energy has no history of consistent dividend payments over 25 years or consistent share repurchases, painting a mixed financial picture for potential investors. The analysis indicates financial instability and unreliability in current dividend practices.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Siemens Energy (ENR.DE) may not be an ideal choice for dividend-focused investors due to its lower than average dividend yield, inconsistent payment history, and unreliable earnings coverage. The company's efforts to increase dividends recently are noted but are overshadowed by a shaky financial outlook. Investors seeking stable, long-term returns may want to look into other firms with a better history and performance in dividend payments.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Discussing the dividend yield helps investors understand the return on investment in terms of dividends alone, which can be a vital factor in decision-making. A higher dividend yield can indicate an attractive return, whereas a lower yield may suggest the opposite.

Historical Dividend Yield of Siemens Energy (ENR.DE) in comparison to the industry average

Siemens Energy's (ENR.DE) dividend yield of 0.8333% in 2023 is significantly lower than the industry average of 3.02%. This disparity reflects that Siemens Energy offers less in terms of dividend income compared to its peers. Reviewing the data from 2017 to 2023, we observe that Siemens Energy did not provide any dividends until 2022, starting at a yield of 0.5688% and rising to 0.8333% in 2023. This upward trend indicates an effort to return value to shareholders, albeit at a slower pace than the industry. In contrast, the industry average has generally remained above 2%, rising from 2.4% to 3.02% over the years. Despite growth, Siemens Energy's yield remains below the industry norm, which may be perceived as less attractive to income-focused investors. Furthermore, the declining stock price from €30 in 2020 to €12 in 2023 complicates the yield's positivity; the diminishing stock price could overshadow the benefit of increasing dividends.

Average annual Growth Rate higher than 5% in the last 20 years?

The dividend growth rate measures how much the dividend paid by a company has increased over a certain period. A growth rate higher than 5% is generally considered a strong indicator of a company's robust financial health.

Dividend Growth Rate of Siemens Energy (ENR.DE)

Based on the given data, Siemens Energy (ENR.DE) has paid no dividends from 2017 to 2023 as the Dividend Per Share Ratio has remained at 0. Consequently, its average dividend ratio is also 0. This means that the company has not provided any returns to shareholders in the form of dividends over the last seven years. Therefore, we cannot calculate a dividend growth rate, let alone analyze whether it exceeds 5%. This trend could be concerning for potential investors looking for dividend income, as Siemens Energy has not demonstrated a commitment to returning capital to shareholders through dividends in recent years.

Average annual Payout Ratio lower than 65% in the last 20 years?

The payout ratio represents the proportion of earnings a company pays to its shareholders in the form of dividends. A sustainable payout ratio indicates financial stability.

Dividends Payout Ratio of Siemens Energy (ENR.DE)

Upon examining Siemens Energy's payout ratio from 2017 to 2023, several points stand out. Firstly, for the years 2017 through 2021, the payout ratio is recorded as 0%. This implies that no dividends were distributed during these years. Moving forward to 2022 and 2023, we observe negative payout ratios of -15.4345% and -1.829%, respectively. These negative figures may be attributed to losses or other exceptional circumstances within the company. The average payout ratio over this period stands at -2.4662%, falling well below the benchmark of 65%. While a lower payout ratio can signify retained earnings for growth, the negative values and the absence of positive dividends point toward underlying financial challenges. The trend, thus, indicates concerning financial health rather than prudent dividend distribution.

Dividends Well Covered by Earnings?

Dividends being well-covered by earnings ensure that the company can maintain its dividend payouts without stretching its financial resources. This is a key criterion for evaluating the sustainability and attractiveness of the stocks for dividend-seeking investors. A well-covered dividend reduces the risk of dividend cuts in the future, which can negatively affect stock prices and investor sentiment. For Siemens Energy, assessing this criterion is crucial given the volatile nature of earnings in the energy sector.

Historical coverage of Dividends by Earnings of Siemens Energy (ENR.DE)

Reviewing the data, Siemens Energy's Earning per Share (EPS) has shown significant volatility over the years, with notable losses in the latest two years ($-0.6479 in 2022 and $-5.4675 in 2023). In contrast, the Dividend per Share (DPS) started being distributed only in 2022 with €0.1 and remained the same in 2023. The ratio of Dividends per Share covered by Earnings per Share fell into negative territory in both 2022 and 2023, indicating that the earnings are insufficient to cover the dividends. Given these figures (-0.1543 for 2022 and -0.0183 for 2023), it is clear that the dividends are not well-covered by earnings. This trend, characterized by negative EPS and dividends financed potentially by cash reserves or borrowing, is unsustainable in the long term and presents a major red flag for potential dividend investors. Unless Siemens Energy can stabilize and grow its earnings, maintaining current dividend levels will be challenging.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow means that the free cash flow generated by the company is sufficient to cover the dividends paid out to shareholders. This criterion is crucial because it indicates that the company is generating enough cash to sustain its dividend payments without compromising its financial stability or needing to take on debt.

Historical coverage of Dividends by Cashflow of Siemens Energy (ENR.DE)

The free cash flow and dividend payout amount for Siemens Energy (ENR.DE) over the years 2017 to 2023 indicate some fluctuations. In 2017, there was negative free cash flow (-€121m) and no dividends, which is a weak position. From 2018 to 2022, the company generated positive free cash flow ranging from €80m to over €1bn. The dividend payout ratio as a percentage of cash flow during these years ranged from around 7% to 11%. This indicates a generally well-covered dividend, with the dividends taking up a manageable portion of the free cash flow, mainly showing strong coverage, except for the dips in 2019 and 2020. The ratio fell slightly in 2022 (6.8%), which is still relatively healthy. In 2023, however, dividends were halted despite €394m in free cash flow; this might be due to strategic reinvestment or other financial considerations. On balance, Siemens Energy showed a good trend of covering dividends with cash flow in most years, suggesting a prudent approach until 2023 where dividends were possibly paused for forward-planning financial reasons.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Siemens Energy (ENR.DE) and why it is important to consider

Historical Dividends per Share of Siemens Energy (ENR.DE)

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years examines if the company has a long history of consistent and reliable dividend payments, signaling financial stability and reliability.

Historical Dividends per Share of Siemens Energy (ENR.DE)

Based on the provided data from 2017 to 2023, Siemens Energy (ENR.DE) has not been able to pay dividends consistently for the last 25 years, only initiating dividend payments in 2022 and 2023 with a dividend per share of €0.10 each year. This indicates that Siemens Energy is relatively new in terms of dividend payments, which might suggest instability or a phase of reinvestment of profits back into the company rather than returning profits to shareholders. For investors seeking long-term reliability and steady income, this trend might be unfavorable.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

Historical Number of Shares of Siemens Energy (ENR.DE)

The given data shows the number of shares for Siemens Energy over the past 7 years, as a representation of stock repurchases over the past 20 years. In 2017 and 2018, the number of shares outstanding remained stable at approximately 399.65 million. A substantial increase occurred in 2019, with shares increasing to 726.65 million, and then a slight decrease to 726.26 million in 2020. A steady decline followed into 2021 (714.75 million) and a further increase of shares in 2023 (828.90 million). Only 2020 and 2021 showed reliable repurchases, corresponding to an average repurchase rate of 16.004 per defined period which is relatively low considering the ups and downs in the number of shares. These fluctuations are generally not favorable as consistent repurchasing is a sign of management's confidence in the company's future performance and a tool to enhance shareholder value. Therefore, the trend in share repurchases for Siemens Energy over the past 20 years is moderate or below expectations.


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